A Processual View of Institutional Change of the Budget Process within an Australian Government Owned Electricity Corporation

Purpose: Australian public sector organisations are faced with their greatest challenge in decades as public sector reforms essentially re-examine the role of the State in the economy. These changes have led to a shift away from a traditional administrative approach of public sector organisations to one that fosters managerialism and economic rationalism, the underlying philosophies of New Public Management. Queensland, the north-eastern state of Australia, has experienced a period of government committed to change and reform specifically related to corporatisation and a national competition policy. Methodology/Approach: To understand the effect of changes in budgeting, the researcher explores the processes of change over a period of time, as they occur through the use of a case study approach. The processual approach adopted for the study is consistent with Old Institutional Economic theory that is used to inform the findings. Findings: It was found that indiscriminate changes to the budgeting process together with the introduction of a transfer pricing system caused considerable resistance. Streamlining was introduced late in the study, which, for the most part, despite the embeddedness of the earlier system, overcame many of the obstacles identified with relation to the budgeting process, whilst the conflict as a result of the transfer pricing system remained an unresolved and thorny issue. Implications: The implications for organisational change management suggest the consideration of embedded institutions within an organisation whilst determining the processes and directions of change. The implications for reform setters and the Queensland Electricity Supply Industry are such that the short term goal of cost efficiency may not necessarily be in the best interest of the overall long term benefits to the community.

[1]  G. Hodgson,et al.  Rethinking economics : markets, technology and economic evolution , 1991 .

[2]  Andy Adcroft,et al.  The (un)intended outcome of public sector performance measurement , 2005 .

[3]  J. Meer-Kooistra The coordination of internal transactions: the functioning of transfer pricing systems in the organizational context , 1994 .

[4]  G. Morgan,et al.  Images of Organizations , 1997 .

[5]  J. Guthrie A critique of the application of accrual accounting to the public sector , 1999 .

[6]  Robert W. Scapens,et al.  Stability and change: an institutionalist study of management accounting change , 2005 .

[7]  A. Pettigrew Context and Action in the Transformation of the Firm , 1987 .

[8]  Sven Modell,et al.  Institutional perspectives on cost allocations: integration and extension , 2002 .

[9]  A. Goddard Organisational Culture and Budgetary Control in a UK Local Government Organisation , 1997 .

[10]  Andrew Pettigrew,et al.  Shaping Strategic Change , 1992 .

[11]  Patrick Dawson Technology and quality : change in the workplace , 1996 .

[12]  Royston Greenwood,et al.  ASQ Forum , 2002 .

[13]  R. Eccles The Transfer Pricing Problem: A Theory for Practice , 1985 .

[14]  R. Yin Case Study Research: Design and Methods , 1984 .

[15]  Robert W. Scapens,et al.  Theories and case studies of organisational accounting practices: limitation or liberation? , 1996 .

[16]  Dipankar Ghosh Complementary arrangements of organizational factors and outcomes of negotiated transfer price , 2000 .

[17]  Robert W. Scapens,et al.  Conceptualizing management accounting change: an institutional framework☆ , 2000 .

[18]  Judy Johnston Strategy, Planning, Leadership, and the Financial Management Improvement Plan: The Australian Public Service 1983 to 1996 , 1998 .

[19]  R. Greenwood,et al.  Understanding Radical Organizational Change: Bringing Together the Old and the New Institutionalism , 1996 .

[20]  P. A. Losty,et al.  A Behavioural Theory of the Firm , 1965 .

[21]  M. Jelinek Managing change for competitive success , 1993 .

[22]  A. Pettigrew Longitudinal Field Research on Change: Theory and Practice , 1990 .

[23]  James R. Frederickson,et al.  Budgeting: An Experimental Investigation of the Effects of Negotiation , 2000 .

[24]  C. Humphrey Reflecting on attempts to develop a financial management information system for the probation service in England and Wales: Some observations on the relationship between the claims of accounting and its practice , 1994 .

[25]  John M. Longshore The Management of Strategic Change , 1990 .

[26]  D. Buchanan Technology and Quality: Change in the Workplace , 1997 .

[27]  G. Hodgson Economics and Institutions: A Manifesto for a Modern Institutional Economics , 1991 .

[28]  M. Considine MANAGERIALISM STRIKES OUT , 1990 .

[29]  Pamela S. Tolbert,et al.  The Institutionalization of Institutional Theory , 1996 .

[30]  R. Scapens,et al.  Co-ordination of internal transactions at Hoogovens Steel; struggling with the tension between performance-oriented business units and the concept of an integrated company , 2001 .

[31]  E. Schein Organizational Culture and Leadership , 1991 .

[32]  Paul M Collier,et al.  The Power of Accounting: A Field Study of Local Financial Management in a Police Force , 2001 .

[33]  L. Parker,et al.  The Australian public sector in the 1990s: New accountability regimes in motion , 1993 .

[34]  P. Grinyer Book reviewThe awakening giant: Continuity and change at ICI : Andrew W. Pettigrew, Basil Blackwell (1985), 519 pp. £25.00 (hardback) , 1986 .

[35]  Patrick Dawson,et al.  Organizational change : a processual approach , 1994 .

[36]  J. Whitney Case Study Research , 1999 .

[37]  A. Hopwood,et al.  The archeology of accounting systems , 1987 .

[38]  Earl R. Babbie,et al.  The practice of social research , 1969 .

[39]  B. Spicer,et al.  A multi-case investigation of a theory of the transfer pricing process☆ , 1995 .

[40]  A. Langley Strategies for Theorizing from Process Data , 1999 .

[41]  Robert W. Scapens,et al.  Never mind the gap: towards an institutional perspective on management accounting practice , 1994 .

[42]  Peter J. Dowling,et al.  Electricity industry reform: a case analysis in Australia , 1998 .

[43]  E. Johnsen Richard M. Cyert & James G. March, A Behavioral Theory of The Firm, Prentice-Hall, Inc., Englewood Cliffs, New Jersey, 1963, 332 s. , 1964 .

[44]  Sujatha Perera,et al.  Diffusion of Transfer Pricing Innovation in the Context of Commercialization - a Longitudinal Case Study of a Government Trading Enterprise , 2003 .

[45]  B. Spicer,et al.  TOWARDS AN ORGANIZATIONAL THEORY OF THE TRANSFER PRICING PROCESS. , 1988 .

[46]  Mark Considine,et al.  THE CORPORATE MANAGEMENT FRAMEWORK AS ADMINISTRATIVE SCIENCE: A CRITIQUE , 1988 .

[47]  C. Emmanuel,et al.  A longitudinal study of the determinants of transfer pricing change , 1999 .

[48]  A. Pettigrew The politics of organizational decision-making , 1973 .

[49]  Z. Hoque,et al.  Public sector reform – Implications for accounting, accountability and performance of state‐owned entities – an Australian perspective , 2001 .

[50]  C. Oliver The Antecedents of Deinstitutionalization , 1992 .

[51]  John Burns The dynamics of accounting change Inter‐play between new practices, routines, institutions, power and politics , 2000 .

[52]  Robert W. Scapens,et al.  Methodological themes : Theories and case studies of organizational accounting practices: limitation or liberation? , 1996 .

[53]  Jeremy F. Dent Accounting and organizational cultures: A field study of the emergence of a new organizational reality , 1991 .

[54]  S. Winter,et al.  An Evolutionary Theory of Economic Change.by Richard R. Nelson; Sidney G. Winter , 1987 .

[55]  C. Hood The “new public management” in the 1980s: Variations on a theme , 1995 .

[56]  C. Hood,et al.  De-Sir Humphreyfying the Westminster Model of Bureaucracy: A New Style of Governance? , 1990 .

[57]  Kim Soin,et al.  ABC and organizational change: an institutional perspective , 2002 .

[58]  A. Richards Strategic Change and the Management Process , 1989 .

[59]  Jean Hartley,et al.  Case study research , 2004 .

[60]  C. Hardy Understanding Power: Bringing about Strategic Change , 1996 .

[61]  A. W. Willsmore Accounting for management control , 1971 .

[62]  Judith R. Gordon,et al.  A diagnostic approach to organizational behavior , 1983 .

[63]  J. Guthrie AUSTRALIAN PUBLIC BUSINESS ENTERPRISES: ANALYSIS OF CHANGING ACCOUNTING, AUDITING AND ACCOUNTABILITY REGIMES , 1993 .

[64]  David A. Buchanan,et al.  Politics and Organizational Change: The Lived Experience , 1999 .

[65]  James W. Fairfield-Sonn,et al.  The Awakening Giant: Continuity and Change in ICI. , 1987 .

[66]  James Guthrie,et al.  Public sector accounting and the challenge of managerialism , 1990 .

[67]  Kieron Walsh,et al.  Public Services and Market Mechanisms , 1995 .

[68]  Thomas Ahrens,et al.  Accounting and Organizations: Realizing the Richness of Field Research , 1998 .

[69]  A. Kouzmin,et al.  Managerialism : something old, something borrowed, little new economic prescription versus effective organizational change in public agencies , 1998 .

[70]  S. Winter,et al.  An evolutionary theory of economic change , 1983 .

[71]  P. Dawson Beyond Conventional Change Models: A Processual Perspective , 1996 .

[72]  I. Lapsley THE ACCOUNTING AND ORGANISATIONAL CONSEQUENCES OF PRIVATISATION AND REGULATION , 1993 .

[73]  Rod Coombs,et al.  Fabricating budgets: A study of the production of management budgeting in the national health service , 1992 .

[74]  C. Hood THE “ NEW PUBLIC MANAGEMENT ” IN THE 1980 s : VARIATIONS ON A THEME , 2003 .

[75]  John Halligan,et al.  Political management in the 1990s , 1992 .

[76]  A. Gruchy Neo Institutionalism, Neo-Marxism, and Neo-Keynesianism: An Evaluation , 1984 .

[77]  Marc R. Tool The Theory of Instrumental Value: Extensions, Clarifications , 1993 .

[78]  Margaret A. Abernethy,et al.  The role of budgets in organizations facing strategic change: an exploratory study , 1999 .

[79]  J. Christensen,et al.  Economics and Management Accounting Research , 1999 .

[80]  D. Shearn,et al.  Absorbing LMS: The Coping Mechanism of a Small Group , 1994 .

[81]  J. Guthrie,et al.  Changes in the Public Sector: A Review of Recent“Alternative” Accounting Research , 1992 .

[82]  John Wanna,et al.  Public sector management in Australia , 1992 .

[83]  Sten Jönsson Institutions and Organizations , 1997 .